Bemidji School Board moves ahead on borrowing $3.5 million
In a unanimous vote Monday, the Bemidji School District's Board of Education approved a resolution authorizing $3.5 million in Aid Anticipation Certificates through the Minnesota Tax & Aid Anticipation Borrowing program.
The district anticipates borrowing $3.5 million in response to a shift in state aid. The approved resolution gives the district the sale and awarding of the certificates, as well as participation in the School District Credit Enhancement Program.
Each month the district is given a certain amount of revenue from the state. This year, according to Chris Leinen, the district's business manager, the state changed its scheduled payments to 70 percent of funding in the current year and 30 percent in the following year.
With interest and borrowing fees, a $3.5 million loan could cost the district the equivalent of two full-time teachers, Leinen said in an earlier interview.
MNTAAB is a consortium of school districts that borrow on a group basis to receive a lower overall cost. By taking out a loan through MNTAAB, districts anticipate they will have the authority to tax and receive the aid, with a guarantee they will pay the money back.
This year, while the district expects to borrow less money, the state aid is not enough to cover expenses in some months, requiring the district to take out a loan.
The school board will have between Oct. 15 and Nov. 24 to take action to adopt a resolution to complete the Minnesota School District Credit Enhancement Program Application. The resolution will set a "not-to-exceed" interest rate and a maximum borrowing amount, which is sent directly to the district from a Bond Counsel.
On Jan. 13, 2011, no formal board action is necessary, but the board will need to provide signatures to approve the set interest rate.
On Sept. 1, 2011, the 2011 certificates will mature.